Schwarz Group secures more power at Aleph Alpha

The Schwarz Group wants to further increase its stake in the German AI startup Aleph Alpha. To this end, it intends to acquire the shares previously held by venture capital investor Bosch Ventures, the corporate group announced. The Schwarz Group, which is behind the discounters Lidl and Kaufland, did not disclose any financial details of the deal. The expansion of the stake is still subject to regulatory approvals.

With the investment, the company aims to further expand its position as a long-term, reliable anchor investor, according to the press release. The Schwarz Group and Bosch Ventures entered into a Series B financing round at the end of 2023, in which Aleph Alpha was able to raise half a billion US dollars.

Schwarz Group now holds 20 percent

According to a report by Wirtschaftswoche, the Schwarz Group held just under 14 percent in mid-January, and Bosch owned around six percent. With this acquisition, the retail group secures further voting rights and strengthens its influence on Aleph Alpha. According to Wirtschaftswoche, both companies received special rights upon their entry, giving them veto power on certain issues. Industry insiders have been expecting the Schwarz Group to further expand its power position at Aleph Alpha for a long time.

Aleph Alpha emerged as a major German AI hope but could not meet expectations in the face of overwhelming US competition and has since positioned itself primarily as an AI service provider for the public sector. Founder Jonas Andrulis stepped down as CEO in October and, according to consistent reports, will not take up the intended chairmanship of the so-called Advisory Board. “It hurts to leave the company behind after being so intensely intertwined with it for six years,” Andrulis told the Neue Zürcher Zeitung. He founded the company in 2019 with the mission of making Europe independent in AI development. However, he remains the largest shareholder with 28 percent.

Layoffs at Aleph Alpha

Aleph Alpha is now led by a dual leadership. This consists of former Schwarz manager Reto Spörri and former Accenture man Ilhan Scheer. According to a report by Handelsblatt, the new leadership has already begun restructuring – and plans to cut jobs. Approximately 50 positions are expected to be affected. Insiders told Handelsblatt of a radical overhaul aimed at focusing Aleph Alpha more on specific core areas.

“We need strong German AI players; otherwise we risk our economic power and thus our prosperity,” said Rolf Schumann, Co-CEO of Schwarz Digits, the digital division of the Schwarz Group. “That's why we must support promising companies with orders and investments.” According to their statements, companies in the Schwarz Group use Aleph Alpha technology for contract creation, screening legal texts, and comparing contract documents. They are also working on automating workflows with AI agents.

(axk)